But this number only represents the median. Lawyer salaries can vary widely based on location, experience, and practice area.
Here are some of the factors that go into creating a lucrative legal practice, including four of the most lucrative legal practice areas in Kentucky.
Factors that Affect a Lawyer’s Income
Many factors affect the revenue a law practice generates and the income a lawyer earns. The most influential factors include:
Your income will depend on who pays you and how they pay you. Some common income structures include the following:
A salaried lawyer can make good money. And paychecks come reliably.
Most associate lawyers at law firms receive a salary. Government lawyers and in-house lawyers at corporations also earn a salary.
A salary is nice, but profit-sharing can truly boost a lawyer’s income. Profit-sharing happens when the lawyer receives a share of the employer’s profits.
Law firm partners usually get a profit share. In-house lawyers often receive stock options or other ownership shares in the business they work for.
The downside to profit sharing is that your income can be unpredictable. If the firm or business has a rough quarter, you might not receive much compensation. But when the firm or business explodes, you can get nice paychecks even if your workload stays the same.
Contingency fees get paid out of the proceeds of a case. This type of fee is largely limited to personal injury cases.
The benefit of a contingency fee is that your pay is directly tied to the results you produce and how much is the personal injury case worth. If you can win more compensation for your clients, you earn a larger fee.
The downside is that you need a full pipeline of cases to keep revenue coming in. Personal injury cases can take a year or more to resolve. During that time, you work on the case without getting paid.
More experienced lawyers make more money. Like all professions, you will start as an entry-level associate and work your way up. In Kentucky, a senior partner can make three to four times more than an associate.
Many practices need a critical mass of clients to keep the lights on and the office running. Rural practices can make significant money, but they must cover more diverse areas of law because of the lower population density.
You also cannot have a rural practice devoted to large businesses. Many large businesses expect to find their lawyers in large cities where they can easily reach courts and airports.
Urban offices have a much better chance of making money. A higher population density means more opportunities to get clients. Locating in a city also opens up many business-centered practice areas like antitrust and healthcare.
Some practice areas make more money than others. The main reason for this is the specialized knowledge needed to practice in certain areas of law. A bankruptcy lawyer must know the bankruptcy code. A tax lawyer must know the tax code. A patent lawyer must have training in science or engineering.
Other reasons lawyers in various practice areas make more money include:
- The way they are compensated
- The clients they have
- The cases they get
For example, an antitrust practice can generate a lot of revenue since it will probably work for billion-dollar multinational conglomerates on cases that need thousands of hours of work.
Four of the most lucrative practice areas are described below:
1. Medical Malpractice
Medical malpractice happens when a doctor or hospital fails to exercise reasonable care in treating a patient. These cases require an understanding of both the law and medicine. Not every lawyer has the aptitude for explaining complex medical concepts to a jury. This fact alone puts good medical malpractice lawyers in high demand.
More importantly, medical malpractice cases often have a high likelihood of winning a big settlement or damage award. Since medical malpractice lawyers usually represent clients on a contingent fee basis, they share in these large settlements and awards.
2. Healthcare Law
Healthcare lawyers represent insurers and healthcare providers to develop compliance plans. These plans ensure they satisfy all state and federal laws governing them. One benefit of this practice is that Congress and state legislatures seem to change the healthcare laws every year, which keeps healthcare lawyers in high demand.
This practice also benefits from having well-funded clients. Hospitals, medical practices, and health insurance companies make substantial money. These businesses pay their lawyers a lot of money so they can keep their profits.
3. Intellectual Property Law
Intellectual property law covers patents, trademarks, copyrights, and trade secrets. These lawyers help businesses secure rights in their innovations. If someone copies the innovations, they can file a lawsuit to stop the misappropriation.
Patent lawyers must have special qualifications. Since they deal with technology, the patent office requires that all patent lawyers have training in science or engineering.
Most patent lawyers have a science or engineering undergraduate degree. However, intellectual property lawyers who do not write and file patent applications do not need a technical background.
The required specialized knowledge and training mean that intellectual property lawyers can charge a premium fee. Also, most intellectual property lawyers work for large corporations and startups. This means they usually have a high collections rate on their fees, which produces a steady revenue stream.
4. Securities Law
Securities lawyers deal with the state and federal rules surrounding investment and corporate ownership. They help startups go public. And they also put together mergers and acquisitions.
These lawyers need specialized knowledge about securities laws, regulations, and procedures. They also work for well-funded clients. As a result, they can charge a premium and their clients will pay it.
Securities lawyers also have an inside track to becoming in-house lawyers. After they become an employee of a large business, they will often receive stock options and may even rise to an executive position.
Legal Practices in Kentucky
Fortunately, lawyers in Kentucky can find a firm or corporation where they can practice in almost any field. Whether you have specialized knowledge or need to train on the job, there is probably a position that will fit your interests and goals.